3)Services and Supplies That Have Been Denied as Bundled or Included in the Basic Allowance of Another Service
The following services and supplies that have been denied as bundled or included in the basic allowance of another service will not be paid:
• Fragmented services included in the basic allowance of the initial service;
• Prolonged care (indirect);
• Physician standby services;
• Case management services (for example, telephone calls to and from the beneficiary); and
• Supplies included in the basic allowance of a procedure.

4) Items and Services Reimbursable by Other Organizations or Furnished Without Charge

A) Services Reimbursable Under Automobile, No-Fault, or Liability Insurance or Workers’Compensation (the Medicare Secondary Payer Program)
Payment will not be made for items and services when payment has been made or can reasonably
be expected to be paid promptly under:
• Automobile insurance;
• No-fault insurance;
• Liability insurance; or
• Workers’ Compensation (WC) law or Plan of the U.S. or a State.

Medicare may make payment if the primary payer denies the claim and documentation is provided
indicating that the claim has been denied in the following situations:
• The Group Health Plan denies payment for services because:
◦ The beneficiary is not covered by the health plan;
◦ Benefits under the plan are exhausted for particular services;
◦ The services are not covered under the plan;
◦ A deductible applies; or
◦ The beneficiary is not entitled to benefits;
• The no-fault or liability insurer denies payment or does not pay the bill because benefits have been exhausted;
• The WC Plan denies payment (for example, when it is not required to pay for certain medical conditions); or
• The Federal Black Lung Program does not pay the bill.
In liability, no-fault, or WC situations, a conditional payment for covered services may be made to prevent beneficiary financial hardship when:
• The claim is not expected to be paid promptly;
• A properly submitted claim was denied in whole or in part; or
• A proper claim has not been filed with the primary insurer due to the beneficiary’s physical or mental incapacity. A conditional payment is made on the condition that the insurer and/or the beneficiary will reimburse Medicare to the extent that payment is subsequently made by the insurer.

B) Items and Services Authorized or Paid by a Government Entity
In general, payment will not be made for the following items and services authorized or paid by a
government entity:
• Those that are furnished by a government or nongovernment provider or other individual at
public expense pursuant to an authorization issued by a Federal agency (for example, Veterans Administration authorized services);
• Those that are furnished by a Federal provider or agency that generally provides services to the public as a community institution or agency (hospitals, SNFs, Home Health Agencies, and comprehensive Outpatient Rehabilitation Facilities are not included in this category). Federal hospitals, like other nonparticipating hospitals, may be paid for emergency inpatient and outpatient hospital services;
• Those that a Federal, State, or local government entity directly or indirectly pays for or furnishes without expectation of payment from any source and without regard to the individual’s ability to pay; and
• Those that a nongovernment provider or supplier furnishes and the charges are paid by a government program other than Medicare or where the provider or supplier intends to look to another government program for payment (unless the payment by the other program is limited to Medicare deductible and coinsurance amounts).

C) Items and Services for Which the Beneficiary, Another Individual, or an Organization Has No Legal Obligation to Pay For or Furnish
Payment will not be made when the beneficiary, another individual, or an organization has no legal
obligation to pay for or furnish the items or services.
Some examples include:
•X-rays or immunizations that are gratuitously furnished to the beneficiary without regard to his or her ability to pay and without
expectation of payment from any source; and
• An ambulance transport provided by a volunteer ambulance company. If the ambulance company asks but does not require a donation from the beneficiary to help offset the cost of the service, there is no enforceable legal obligation for the beneficiary or any other individual to pay for the service.
When items or services are furnished without charge to indigent Medicare patients and non-Medicare indigent patients because of their inability to pay, both groups must be consistently billed.

D) Defective Equipment or Medical Devices Covered Under Warranty
No payment will be made under cost reimbursement for defective medical equipment or medical devices under warranty if they are replaced free of charge by the warrantor or if an acceptable replacement could have been obtained free of charge under the warranty, but it was purchased instead.

When defective equipment or medical devices are replaced under warranty, hospital or other provider services that are furnished by parties other than the warrantor are covered despite the warrantor’s liability.

Payment may be made for defective equipment or medical devices as follows:
• When a replacement from another manufacturer is substituted because the replacement offered under the warranty is not acceptable to the beneficiary or to the beneficiary’s physician;
• Partial payment, if defective equipment or medical devices are supplied by the warrantor and a charge or a pro rata payment is imposed; and
• Payment is limited to the amount that would have been paid under the warranty if an acceptable replacement could have been purchased at a reduced price under a warranty, but the full price was paid to the original manufacturer or a new replacement was purchased from a different manufacturer or other source.